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Mortgage delinquencies increase
Rising delinquency rates indicate that Australian borrowers are starting to feel the pinch from rising rates.
Moody's Investors Service reported that prime mortgage delinquencies greater than 30 days increased to 1.34% in the first quarter of 2010, up from 1.10% in Q4 in 2009.
Meanwhile, non-conforming mortgage delinquencies greater than 30 days continued to rise to 13.02% from 12.13%.
"Since October 2009, six consecutive 0.25 percentage point rate rises have started pressuring mortgage payments, reflected by the increase in arrears over the course of this quarter," says Ryan Lu, a Moody's AVP/ Analyst for the Structured Finance Group in Sydney.
"At the same time, seasonal upward trend in delinquencies -- due to holiday spending during Christmas and the New Year -- is also pushing the arrears level up," adds Lu.
Moody's included details of Australia's delinquency rates in its report on the nation's RMBS market.
The report concluded that delinquency levels are not expected to increase significantly as official interest rates return to neutral levels.
By Andrea Cornish | 28 May 2010
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